CONCEPTS AND DEFINITIONSElectronic commerce or e-commerce refers to a wide range of online business activities for products and services.1. It also pertains to “any form of business transaction in which the parties interact electronically rather than by physical exchanges.2. E-commerce is usually associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network.
A more complete definition is: “E-commerce is the use of electroniccommunications and digital informationprocessing technology in businesstransactions to create, transform, andredefine relationships for value creationbetween or among organizations, andbetween organizations and individuals”
Different types of e-commerce Business-to-business (B2B); Business to-consumer (B2C); Business-to-government (B2G); Consumer-to-consumer (C2C); Mobile commerce (m-commerce).
B2B e-commerce It is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. The B2B market has two primary components: e-frastructure and e- markets.
Business-to-consumer It is the second largest and the earliest form of e-commerce. Business-to-consumer e-commerce, or commerce between companies and consumers. The more common applications of this type of e- commerce are in the areas of purchasing products and information
B2G e-commerce B2G is generally defined as commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations.
C2C e-commerce C2C is simply commerce between private individuals or consumers. This type of e-commerce is characterized by the growth of electronic market places and online auctions, particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers. It perhaps has the greatest potential for developing new markets.
m-commerce M-commerce (mobile commerce) is the buying and selling of goods and services through wireless technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs). Japan is seen as a global leader in m- commerce.
Forces fueling e-commerce Economic forces: - reduction in communications costs, low-cost technological infrastructure, speedier and more economic electronic transactions with suppliers, lower global information sharing and advertising costs, and cheaper customer service alternatives. Market forces: - The Internet is likewise used as a medium for enhanced customer service and support. It is a lot easier for companies to provide their target consumers with more detailed product and service information using the Internet. Technology forces
components of a typical successfule-commerce transactionSeller should have the following components:● A corporate Web site with e-commerce capabilities (e.g., a secure transaction server);● IT-literate employees to manage the information flows and maintain the e-commerce system.
Conti..Transaction partners● Banking institutions that offer transaction clearing services (e.g., processing credit card payments and electronic fund transfers);● For business-to-consumer transactions, the system must offer a means for cost-efficient transport of small packages..
Conti…Consumers (in a business-to-consumer transaction) :● Form a critical mass of the population with access to the Internet and disposable income enabling widespread use of credit cards; Possess a mindset for purchasing goods over the Internet rather than by physically inspecting items.
Conti… Firms/Businesses (in a business-to- business transaction) that together form a critical mass of companies (especially within supply chains) with Internet access and the capability to place and take orders over the Internet.
Conti…Government, to establish:● A legal framework governing e-commerce transactions (including electronic documents, signatures, and the like);● Legal institutions that would enforce the legal framework (i.e., laws and regulations) and protect consumers and businesses from fraud, among others.
How is the Internet relevant to e-commerce? The Internet is an enabler for e-commerce as it allows businesses to showcase and sell their products and services online and gives potential customers, prospects, and business partners access to information about these businesses and their products and services that would lead to purchase.
What are the advantages ofe-commerce for businesses? E-commerce serves as an “equalizer” E-commerce makes “mass customization” possible. E-commerce allows “network production.
How is e-commerce helpful tothe consumer? In C2B transactions, customers/consumers are given more influence over what and how products are made and how services are delivered, thereby broadening consumer choices. E-commerce allows for a faster and more open process, with customers having greater control. E-commerce makes information on products and the market as a whole readily available and accessible, and increases price transparency, which enable customers to make more appropriate purchasing decisions.
How are business relationshipstransformed through e-commerce? E-commerce transforms old economy relationships (vertical/linear relationships) to new economy relationships characterized by end- to-end relationship management solutions (integrated or extended relationships).
What are the existing practices in developing countries with respect tobuying and paying online??
A. Traditional Payment Methods● Cash-on-delivery.Many online transactions only involve submitting purchase orders online. Payment is by cash upon the delivery of the physical goods.● Bank payments.After ordering goods online, payment is made by depositing cash into the bank account of the company from which the goods were ordered.
B. Electronic Payment Methods● Innovations affecting consumers, include credit and debit cards, automated teller machines (ATMs), stored value cards, and e-banking.● Innovations enabling online commerce are e- cash, e-checks, smart cards, and encrypted credit cards. These payment methods are not too popular in developing countries.
Advantages of Ecommerce Faster buying/selling procedure, as well as easy to find products. Buying/selling 24/7. More reach to customers, there is no theoretical geographic limitations. Low operational costs and better quality of services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from different providers without moving around physically.
Disadvantages of Ecommerce Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money. There is no guarantee of product quality. Mechanical failures can cause unpredictable effects on the total processes. As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check. There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.